FOCUS BUSINESS ADVICE
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inability to define accurately what the term “design development” means. There is only one answer and that is to sit with the contractor and the supply chain, once the preferred bidder has been identified, and work your way through these CDP issues with a responsibility matrix prior to contract, to try to avoid trouble later. I had another recent experience where one major CDP issue involved the whole design team and three or four other subcontractors who were all involved in the interface of their own packages into the design of the project. In some instances, email communication on the subject was circulated to 20 different people, all trying to solve the problem.
Avoiding disputes So, what else can you do to avoid payment disputes? I am a great advocate of having an agreed schedule of payment dates, and you must ensure that you stick to these religiously. These schedules will set out the date of the application, the due date, the final date for payment and the dates when a pay less notice should be issued. If you stick to these then life will be a lot easier. It goes without saying that this does not necessarily mean you will get paid what you apply for, but at least it will ensure you are complying with the contractual payment requirements. If your application is late, it may not be valid, so set reminders on your calendar. There have been many adjudications in the past five years over arguments that contractors are not meeting the dates set out in the contract, and this has had a significant impact on cash flow. You can avoid the problem by doing as I suggest. Another factor relates to the accuracy of your payment applications, and my advice is to provide as much detail as you can to either the employer, or the contractor or subcontractor. If, for example, you are claiming 50% completion of first fix, then provide the relevant information to justify that, otherwise the chances are that someone will put a red pen through it. If you are claiming for variations, then you need to demonstrate that the work being claimed is a variation, and you need all the relevant paperwork in place to support that position. If you are claiming
for materials on site, then provide the relevant delivery notes and supplier invoices. If you are claiming for dayworks, make sure these are substantiated with an instruction, and the signature of somebody on the employer or the contractor’s side – if you can get that – which is often a major problem. In short, do not give the third-party the opportunity to reduce the amount you are claiming and, if you are asked for further information, provide it.
Suspension or termination …or both So, suspension or termination? In previous articles I touched on these provisions in the event you are not being paid by the final date for payment. I am seeing an increasing number of contractors and subcontractors threatening to suspend the performance of their obligation as a result of failure to pay on time. There are, of course, some difficulties attached with suspension. For example, where would you place the resources working on a project on other projects, what are the health and safety issues if you leave the site suddenly, and once you receive payment you then have to re-mobilise the project, which can create certain difficulties. It is a process that is to be thought through very carefully, but in my experience the threat of suspension and/or termination usually brings the late payer to the table.
Importance of notices You also need to make sure that you get the timing of the various notifications right. Every contract or subcontract you enter into will have particular notification procedures, and this has been fertile ground for disputes for the last 15 years. Make sure that you read the notice provisions and comply with them. There
PLEASE GET IN TOUCH
In my last article, I was critical of the adjudication process as a means of resolving construction disputes, and I’m grateful to several Members who have contacted me to tell
58 CABLEtalk OCTOBER/NOVEMBER 2019
me about their own recent experiences, which resulted in them incurring significant costs and not achieving a satisfactory level of payment. I would encourage other Members
to send me details of any issues they have faced so that we can all share their experiences.
Please email me on len@
buntonconsulting.co.uk
Payment disputes can become costly and time-consuming
might be requirements for notices to go to a particular address or to be served by recorded delivery so don’t just assume that if you bang something out by email you have complied with the contractual provisions. This is the sort of area where contractors and subcontractors need to have internal procedures to make sure their contract management and commercial management people are aware of their obligations. The contract requires you to issue notices so don’t rely on verbal discussions, progress reports or minutes of meetings.
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